Though often overlooked, the trucking industry is critical to the health on the US economy. Think about it: without truck drivers delivering goods, interstate commerce would grind to a screeching, tire-burning halt.
Unique Challenges
Despite the importance of trucking companies, the way the system is structured often leaves them in a shaky financial position. Truck companies submit invoices for services rendered, and then often wait 30-90 days for payment on the accounts receivables.
For a bigger company with large cash reserves, waiting to be paid would not be problems. But for small to mid-size companies operating on a decent budget, it might ‘t be an option. Expenses such as payroll and gas provide in the time between payment, and not paying your drivers is never a good business repeat. Add to that rising fuel costs, delays due to traffic congestion, driver shortages and new regulations, and is a recipe for financial hardship.
Therefore, trucking companies often have to turn to outside financing. The following are some methods trucking companies to consider:
Asset-Based Lending
Also known as factoring, this options refers to implies by which businesses sell their accounts receivables to a factoring company. Approval for factoring draws on on the creditworthiness of the trucking company’s customers.
At the duration of the sale, customer gets 80-90% of this cash back immediately from the bills. The remainder of the balance comes after customer repayment, less a portion fee that typically ranges from 1-5%.
This options best for B2B firms that cannot manage to wait for payment, and the cost is usually 4-5% monthly with annual price typically between 18-30%.
Bank Loans
Though in order to come by, bank loans are often the cheapest way of financing. The loan process involves an application and athleanx workout review the company’s creditworthiness and financial history. Small companies especially can be denied for loans, although exceptions do exist.
After approval, fund disbursement usually takes about 30-90 days to reach a trucking company’s savings. This form of funding is the for trucking outfits along with a great credit record and do not require the money immediately.
Cash-Advances
Cash advances take place when a small-business receives a loan sum from your local neighborhood lender. The corporate pays the lending company back with percentages regarding their monthly card receipts up to the loan (plus a predetermined rate) is repaid. Happen to be legal limits to the rates, and they will cannot be changed retroactively. The profit to cash advances is immediate cash- occasion the fastest method for obtaining cash without in order to a loan shark.
This financing method is better for trucking companies who need immediate cash for regarding amount of one’s time and have limited financing options. Zox pro training system is usually 20% or even more.
Lease-Back
A trucking company might want to sell property, plant, and/or equipment, and simultaneously leases it back for earnings.
It very best for trucking companies with valuable plant or equipment assets that are underutilized, along with the cost is monthly lease payments as well as the depreciation and tax burdens of tools.
Choices, Choices
Every trucking company is unique, and it is well over them to find funding solutions that meet their individual needs. Being informed on all the options is initial step toward finding a fitting cash flow solution.
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